Oil extends gains after US jobs report

Friday 06 September 2013 14.53
Oil prices move higher after key US jobs data
Oil prices move higher after key US jobs data

The price of oil rose toward $110 a barrel today as US jobs data fuelled expectations that the Federal Reserve will keep its economic stimulus measures in place longer than expected.

The benchmark oil contract for October delivery was up $1.26 at $109.63 a barrel in electronic trading on the New York Mercantile Exchange. 

According to the US Labor Department, US employers added 169,000 jobs in August, while July's figure was corrected downward from an earlier estimate of 162,000 jobs to 104,000 jobs, the fewest in over a year.

While the unemployment rate fell to 7.3%, the lowest in nearly five years, it was lower because more people stopped looking for work and were no longer counted as unemployed.

The slower hiring could lead the Fed to keep its bond-purchase programme in place, rather than taper it off this month, as many investors had been expecting.

The stimulus programme is seen favouring investments in commodities like oil and in stocks as they could provide better returns than bonds.

Brent, the benchmark for international crudes, was up 48 cents to $115.74 per barrel on the ICE Futures exchange in London. Brent has risen sharply recently due to fears of a US intervention in Syria, even if the scale of the attack is now expected to be low.

US President Barack Obama won little backing at a summit this week in St Petersburg in Russia, as the host, China and the European Union remained opposed to or at least skeptical about military action. But he continued to push for support for an American strike against Syria, which analysts expected to underpin prices.

Although Syria is not a major oil producer, it lies at the heart of a region that is a major exporter. Investors fear its destabilisation could disrupt supplies.

Keywords: brent, oil, us